Sahitya Mudranalaya Pvt. Ltd. and Anr. Vs. Additional Director General and Ors. – Gujarat High Court

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(2020) taxcode.in 101 HC

IN THE HIGH COURT OF GUJARAT

Sahitya Mudranalaya Pvt. Ltd. and Anr.
v.
Additional Director General and Ors.

R/Special Civil Application No. 20748 of 2018 with R/Special Civil Application No. 7414 of 2019
Decided on 29-Jan-20

Ms. Justice Harsha Devani and Ms. Justice Sangeeta K. Vishen

Add. Info:

For Appellant(s): Ms. Disha N Nanavaty

For Respondent(s): Mr. Ankit Shah(6371), Mr. Devang Vyas(2794), Mr. Nirzar S Desai(2117).

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Judgment/Order:

ORAL JUDGMENT

(PER: HONOURABLE MS.JUSTICE HARSHA DEVANI)

1. Rule. The learned senior standing counsel waive service of notice of rule on behalf of the respective respondents forthwith. Since the controversy involved in both these petitions is the same, they were taken up for hearing together and are decided by this common judgment.

2. The facts of the case in Special Civil Application No. 20748 of 2018 are that the first petitioner (hereinafter referred to as the “petitioner – company”) is a company incorporated under the provisions of the Companies Act and engaged in the business of printing. The second petitioner is a Director of the petitioner – company.

2.1. Service tax was introduced in India for the first time in 1994 under Chapter V of the Finance Act, 1994 with effect from 1st July 1994, which came to be amended from time to time. Chapter V of the Finance Act, 1994 has been omitted by section 173 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’), which came into force from 1st July 2017.

2.2. The petitioner – company is registered with the service tax department for payment of service tax on reverse charge mechanism since 15.07.2013. In the course of its business, the petitioner – company has provided services in relation to examinations conducted by the Maharashtra State Board of Secondary and Higher Secondary Education, Pune, Maharashtra State Council of Examination, Pune, Gujarat Secondary and Higher Secondary Education Board, Gandhinagar and Gujarat Technological University, Ahmedabad (hereinafter referred to as the ‘Boards/University’).

2.3. It is the case of the petitioners that since the services relating to examinations provided to educational institutions were exempted, no service tax was levied or leviable in relation thereto. Accordingly, no service tax was ever charged or paid by the petitioners in reference to the services provided by the petitioners to the above-referred institutions.

2.4. A case of evasion of central excise duty was investigated by the competent authority in relation to which a panchnama was prepared on 04.09.2015. During the course of the said investigation, the department had bifurcated bills of five years into various groups including one group of services rendered by the petitioners. The petitioners had furnished an explanation regarding exemption of the petitioner – company’s services from the applicability of service tax by virtue of a written statement dated 03.05.2017. Upon conclusion of the inquiry, a show-case notice dated 19.06.2017 with respect to excise duty only, was issued, and assessment order came to be passed, which is subject matter of appeal before the competent authority.

2.5. During the period when the provisions of Chapter V of the Finance Act, 1994 were in force, no show-cause notice was issued or was pending concerning the liability of the petitioner to pay service tax. After Chapter V of the Finance Act, 1994 came to be omitted, the petitioners have been served with the impugned show-cause notice dated 20.04.2018 purported to have been issued under section 73 of the Finance Act, 1994 read with sections 142(8)(a) and 174 of the CGST Act.

2.6. Being aggrieved, the petitioners have filed the present petition.

3. Insofar as facts of Special Civil Application No. 7414 of 2019 are concerned, the first petitioner is a partnership firm and is engaged in the business of transportation and provides services as a transport contractor. The petitioner – firm is registered with the Service Tax Range, Mehsana Division, Commissionerate – Ahmedabad-III under rent-a-cab service. The petitioners provide vehicles for conduct of state examination in the following Departments/Boards of the Government of Gujarat: (i) Gujarat Secondary and Higher Secondary Education Board, Gandhinagar; (ii) Gujarat Technological University, Ahmedabad; (iii) Gujarat State Examination Board; and (iv) Gujarat Council of Educational Research and Training, Gandhinagar (GCERT).

3.1. In relation to such services, the petitioner firm, as service provider, had paid service tax during the period of 01.07.2013 to 30.09.2013. It is the case of the petitioners that since the services provided to/by an educational institution in respect of education by way of auxiliary education services, has been exempted from service tax vide Notification dated 25/2012-ST dated 28.06.2012 as amended, and since the petitioner firm had paid the service tax on its own, the petitioner firm filed a refund claim in relation to the same. The competent authority namely the Assistant Commissioner, Central Excise and Service Tax found that the tax in reference was borne by the assessee and not passed onto any one and further that the services in reference were exempt. Accordingly, by an order dated 01.10.2014, refund was allowed in favour of the petitioner firm. Against the said order, the Department preferred an appeal, wherein, the appellate authority held that the petitioner firm was eligible to refund; however, the same was not allowed in terms of section 12C of the Central Excise Act, 1944 as in the opinion of the authority, it would amount to unjust enrichment. It was, accordingly, directed that the refund be credited to the Consumer Welfare Fund in accordance with section 12C of the Central Excise Act.

3.2. The petitioners have challenged the order passed by the Commissioner (Appeals) before the appellate Tribunal, which is pending consideration.

3.3. For the period subsequent to 30.09.2013, the petitioner firm availed of exemption in relation to services provided by it to educational institutions. The service tax audit has been undertaken by the Service Tax Audit Division and in the said scrutiny, no query or objection was raised in respect of exemption of service tax availed by the petitioner firm.

3.4. Thus, the petitioner firm was not only assessed taking into consideration the exemption as provided for services to educational institution, on adjudication, it was the case of the Department itself that the petitioner firm was eligible for exemption under the said category in relation to the services provided by it to the organisations referred hereinabove.

3.5. After Chapter V of the Finance Act, 1994 came to be omitted, the first respondent – Senior Intelligence Officer, Director General of GST Intelligence, by a communication dated 30.11.2017 initiated an inquiry regarding short payment/non-payment of service tax for providing services by the petitioner firm by considering the recipients as educational institutes. The said communication was, thereafter, followed by further communications.

3.6. By a communication dated 15.12.2017, the petitioners brought to the notice of the first respondent that the services provided by the petitioner firm are only to educational institutions and such services are exempted. It was also brought to the notice of the said respondent that the Central Excise and Service Tax Audit-1 Commissioner had undertaken audit for the period commencing from November 2010 to September 2015 and thereafter, from April 2015 to March 2017. The audit report for the first audit had since been provided and the subsequent report was pending.

3.7. It is the case of the petitioners that without taking into consideration the response submitted by them, the first respondent addressed repeated communications to the petitioners and sought various information in relation to the selfsame period for which, the audit was undertaken by the competent authority.

3.8. By a communication dated 04/05.04.2019, the petitioners brought to the notice of the respondent – authority that it has no authority to initiate any inquiry after the omission of the Chapter V of the Finance Act, 1994 and prayed that the inquiry pursuant to the communication dated 30.11.2017 be dropped. It is the case of the petitioners that during the period when the provisions of Chapter V of the Finance Act, 1994 were in force, no show-cause notice was issued, nor was any inquiry pending concerning short/non-payment of service tax. It is the case of the petitioners that it was the understanding of all concerned, including the Department that the institutions referred to hereinabove were educational institutions and the persons providing services covered under the exemption notification to such institutions were exempt from payment of service tax. The petitioner firm had, accordingly, been assessed and found to be eligible for grant of refund. The assessment, taking into consideration the exemption, has been found to be in order in the two audits undertaken by the competent authority. According to the petitioners, therefore, the question of there being any short/non-payment of service tax would not arise.

3.9. By a communication dated 04.04.2019, the respondents have not acceded to the representation made by the petitioners and summoned the petitioners to appear before them in furtherance of the inquiry. Pursuant to the summons, the petitioners appeared before the authority on 15.04.2019 and reiterated their stand as reflected in the memorandum of petition. The petitioners tendered their submissions on 15.04.2019 and thereafter, on 16.04.2019. On 24.04.2019, the petitioners received a show-cause notice dated 24.04.2019, purported to have been issued under section 73(1) of the Finance Act, 1994 read with sections 142(8)(a) and 174 of the CGST Act. Being aggrieved, the petitioners have filed the present petition challenging the show-cause notice dated 24.04.2019.

4. At the outset, Mr. Ankit Shah, learned Senior Standing Counsel for the respondent raised a preliminary objection to the very maintainability of the petition on the ground that a writ petition under article 226 of the Constitution of India would not be maintainable before this court, more so, considering the fact that the question involved in the case would have an impact on the determination of rate of duty and would, therefore, fall within the ambit of section 35L of the Central Excise Act, 1944, which provides for an appeal against any order passed by an Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment, shall lie to the Supreme Court. Since the contention raised relates to the very maintainability of the petitioner, such contention needs to be dealt with at the outset.

4.1. The learned Senior Standing Counsel for the respondents submitted that if the show-cause notices were to culminate into orders-in-original, the appeals would lie to the Commissioner (Appeals) and then to the Appellate Tribunal. It was submitted that since, the dispute involved in these cases relates to the determination of a question having a relation to the liability to service tax of the services provided by the petitioners, in view of the provisions of section 35L of the Central Excise Act, appeal against the order of the Appellate Tribunal would lie before the Supreme Court and not before the High Court, and hence, this court would not enter into the merits of the case and would relegate the petitioners to answer to the show-cause notices. In support of such submission, the learned senior standing counsel placed reliance upon the decision of the Supreme Court in Union of India v. Coastal Container Transporters’ Association, rendered on 26th February 2019 in Civil Appeal No. 2276 of 2019, wherein, the court held thus:

“7. In the writ petition filed before the High Court, a preliminary objection was raised on behalf of appellant nos.2 and 3 with regard to maintainability of the petition. Firstly, it was pleaded that as the writ petition itself was directed against the show cause notices, such petition was not maintainable. Secondly, on the ground that as the controversy relates to classification of services and even if the show cause notices were to culminate into final order, appeal would lie before the Supreme Court, as such, High Court, in exercise of writ jurisdiction, should refrain from entertaining the petition which involves a classification dispute. It was pleaded that it was not either a case of lack of jurisdiction or a case where the principles of natural justice are violated, so as to entertain the petition in which only show cause notices were challenged.”

“18. As we are not in agreement with the view taken by the High Court, in entertaining the writ petition against show cause notices, we refrain from recording any finding on contentious issues which arise for consideration. If any finding is recorded by this Court at this stage, same will prejudice either of the parties. Having regard to the contentions raised, it cannot be said that there are no factual disputes. Applicability of the circulars dated 06.08.2008 and 05.10.2015 is also in serious dispute. Further the classifiability of service rendered by a particular assessee is to be considered with reference to facts of each case depending upon nature of service rendered and the contract entered into. There cannot be any general declaration, as prayed for. The judgment of this Court in the case of Deputy Commissioner, Central Excise v. Sushil and Company, (2016) 13 SCC 223, also cannot be applied to the facts of the case on hand to come to the conclusion that the services rendered by the respondents will fall in the category of “goods transport agency” but not “cargo handling service”. In the aforesaid judgment, the contract was only for supply of labour and it was the specific case of the assessee that such labour was not doing any work of packing, unpacking, loading, unloading of any cargo. In view of such written contract for limited services referred above, this Court has held that such service cannot be held to be “cargo handling service”.

19. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court.

The judgment of this Court in the case of Union of India v. Guwahati Carbon Ltd., (2012) 11 SCC 651, relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices.

Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. v. Union of India, 2004 (166) ELT 153 (SC), relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage.”

4.2. It was submitted that the above decision would be squarely applicable to the facts of the present case and hence, this court may not entertain the writ petition and may relegate the petitioners to answer to the show-cause notice. It was further submitted that the case of the Department is that the services provided by the petitioners do not fall in the negative list; therefore, essentially, the dispute is a classification dispute. It was further submitted that the contention that the show-cause notice is conclusive in nature is incorrect as the petitioners can put up their case before the concerned authority, hence, the petitioners be relegated to avail of the statutory remedy.

5. On the other hand, Mr. Mihir Joshi, Senior Advocate, and Mr. Mitul Shelat, learned counsel for the petitioners, submitted that the controversy involved in the present case, does not involve a classification dispute inasmuch as, the classification of the services provided by the petitioners is not in dispute. What is required to be examined is whether the parties to whom services have been provided by the petitioners, viz. Boards and University are educational institutions.

5.1. Referring to the contents of the show-cause notices, it was pointed out that there are no disputed questions of fact and that, on the basis of admitted facts, the court is required to examine as to whether or not, the Boards and the University are educational institutions. If the Boards and University are found to be educational institutions, the services provided to them are exempt.

5.2. Reliance was placed upon the decision of the Supreme Court in Deputy Commissioner Central Excise v. Sushil & Co., (2016) 13 SCC 223, wherein, the court held thus:

“3. The respondent challenged this show-cause notice by filing a writ petition in the High Court inter alia, contending that no services were provided by the respondent by entering into the aforesaid contract, as it was only supplying labour and the labour was not doing any work of packing, unpacking, loading and unloading of any cargo. The High Court, by the impugned judgment, has accepted the plea of the respondent, resulting into allowing the writ petition and quashing the show-cause notice. It is this judgment of the High Court, the validity of which is questioned by the appellant Department in the present appeal.

4. Before coming to the issue at hand, we may record the statement of Mr A.K. Sanghi, learned Senior Counsel appearing for the appellant Department, that it was not appropriate for the High Court to deal with the said writ petition, bypassing the adjudicatory machinery provided under the Act, more so when the statutory appeals against the adjudication orders are also provided. However, we find that the High Court has simply gone by the contract in question, which was entered into between the respondent and M/s. BirIa Corpn. Ltd. and taking into consideration all the averments, which were made in the show-cause notice, on the basis of admitted facts, it has come to a conclusion that even when the allegations in the show-cause notice are accepted, the said contract does not amount to providing any “Cargo Handling Service” as defined under Entry 23 of Section 65 of the Act. Therefore, we are of the opinion that the High Court did not commit any mistake or illegality in entertaining the writ petition when no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties, which were so specifically recorded by the High Court itself.”

5.3. Reliance was also placed upon the decision of this court in Darshan Boardlam Ltd. v. Union of India, 2013 [287] ELT 401, wherein, on behalf of the revenue a contention had been raised that the petition may not be entertained as the impugned order under challenge is appealable under section 35G of the Central Excise Act, 1944 before the Appellate Tribunal; and that, under section 35G of the said Act, an appeal would not lie before this court but would directly lie before the Supreme Court, which is suggestive of the fact that the legislature has thought it fit not to provide for appeal before the High Court against the order passed by the Appellate Tribunal and if such is the position, then no writ petition under article 226 of the Constitution of India would be maintainable directly against the order passed by the Commissioner. Therefore, the court should not entertain the petition but should relegate the petitioner to avail of the alternative remedy of appeal. The court referred to various decisions of the Supreme Court as well as the High Courts, including the decision of the Supreme Court in Union of India v. Guwahati Carbon Limited, 2012 [278] ELT 26, and bearing in mind the principles of law enunciated in the said decisions found that there were good grounds to overrule the preliminary objection of the revenue and proceeded to decide the issues raised in the petition.

5.4. It was submitted that the decision of the Supreme Court in Coastal Containers Transporters’ Association, (supra) does not lay down that a writ petition against a show-cause notice is not maintainable in law. It was contended that the judgment is peculiar to the facts of that case wherein there were factual disputes; the disputes regarding classification of services rendered required consideration of the facts of each case depending on the nature of services rendered and the contract entered into.

5.5. It was further submitted that the decision of the Supreme Court in Union of India v. Guwahati Carbon Limited (supra), would also not be applicable to the facts of the present case inasmuch as in that case, the writ petition sought to challenge the assessment order. Since, a statutory appeal against the order of the Appellate Tribunal in proceedings arising from such order, lay before the Supreme Court, it was held that the writ petition ought not to have been entertained.

5.6. The attention of the court was drawn to the contents of the impugned show-cause notices (reference to which shall be made subsequently), to submit that the impugned show-cause notices are more than simple show-cause notices inasmuch as there is a conclusion therein as regards the liability of the petitioners. Reliance was placed upon the decision of the Supreme Court in Siemens Ltd. v. State of Maharashtra, (2006) 12 SCC 33, wherein, it has been held thus:

“9. Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of U.P. v. Brahm Datt Sharma, (1987) 2 SCC 179, Special Director v. Mohd. Ghulam Ghouse, (2004) 3 SCC 440 and Union of India v. Kunisetty Satyanarayana, (2006) 12 SCC 28, but the question herein has to be considered from a different angle viz. when a notice is issued with premeditation, a writ petition would be maintainable. In such an event, even if the court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose. (See K.I. Shephard v. Union of India, (1987) 4 SCC 431.) It is evident in the instant case that the respondent has clearly made up its mind. It explicitly said so both in the counter-affidavit as also in its purported show-cause notice.

10. The said principle has been followed by this Court in V.C., Banaras Hindu University v. Shrikant, (2006) 11 SCC 42, stating:

“48. The Vice-Chancellor appears to have made up his mind to impose the punishment of dismissal on the respondent herein. A post-decisional hearing given by the High Court was illusory in this case.

49. In K.I. Shephard v. Union of India (supra) this Court held:

‘It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose.’ ”

(See also Shekhar Ghosh v. Union of India, (2007) 1 SCC 331 and Rajesh Kumar v. D.C.I.T., (2007) 2 SCC 181)

11. A bare perusal of the order impugned before the High Court as also the statements made before us in the counter-affidavit filed by the respondents, we are satisfied that the statutory authority has already applied its mind and has formed an opinion as regards the liability or otherwise of the appellant. If in passing the order the respondent has already determined the liability of the appellant and the only question which remains for its consideration is quantification thereof, the same does not remain in the realm of a show-cause notice. The writ petition, in our opinion, was maintainable.”

5.7. Reference was made to the decision of the Supreme Court in Oryx Fisheries (P) Ltd. v. Union of India, (2010) 13 SCC 427, wherein, it has been held thus:

“27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge-sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show-cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony.

28. Justice is rooted in confidence and justice is the goal of a quasi-judicial proceeding also. If the functioning of a quasi-judicial authority has to inspire confidence in the minds of those subjected to its jurisdiction, such authority must act with utmost fairness. Its fairness is obviously to be manifested by the language in which charges are couched and conveyed to the person proceeded against.

29. In the instant case from the underlined* portion of the show-cause notice it is clear that the third respondent has demonstrated a totally closed mind at the stage of show-cause notice itself. Such a closed mind is inconsistent with the scheme of Rule 43 which is set out below. The aforesaid Rule has been framed in exercise of the power conferred under Section 33 of the Marine Products Export Development Authority Act, 1972 and as such that Rule is statutory in nature.

30. Rule 43 of the MPEDA Rules provides as follows:

“43. Cancellation of registration.—Where the Secretary or other officer is satisfied that any person has obtained a certificate of registration by furnishing incorrect information or that he has contravened any of the provisions of this rule or of the conditions mentioned in the certificate of registration, or any person who has been registered as an exporter fails during the period of twelve consecutive months to export any of the marine products in respect of which he is registered, or if the Secretary or other officer is satisfied that such person has become disqualified to continue as an exporter, the Secretary or such officer may, after giving the person who holds a certificate a reasonable opportunity of making his objections, by order, cancel the registration and communicate to him a copy of such order.”

31. It is of course true that the show-cause notice cannot be read hypertechnically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show-cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show-cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show-cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence.

32. Therefore, while issuing a show-cause notice, the authorities must take care to manifestly keep an open mind as they are to act fairly in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show-cause notice.

33. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi-judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it.

34. A somewhat similar observation was made by this Court in Kumaon Mandal Vikas Nigam Ltd. v. Girja Shankar Pant, (2001) 1 SCC 182. In that case, this Court was dealing with a show-cause notice-cum-charge-sheet issued to an employee. While dealing with the same, this Court in para 25 by referring to the language in the show-cause notice observed as follows:

“25. Upon consideration of the language in the show-cause notice-cum-charge-sheet, it has been very strongly contended that it is clear that the officer concerned has a mindset even at the stage of framing of charges and we also do find some justification in such a submission since the chain is otherwise complete.”

After para 25, this Court discussed in detail the emerging law of bias in different jurisdictions and ultimately held in para 35, the true test of bias is:

“35. The test, therefore, is as to whether a mere apprehension of bias or there being a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom—in the event however the conclusion is otherwise inescapable that there is existing a real danger of bias, the administrative action cannot be sustained:” (emphasis supplied)

35. Going by the aforesaid test any man of ordinary prudence would come to a conclusion that in the instant case the alleged guilt of the appellant has been prejudged at the stage of show-cause notice itself.”

5.8. Reference was also made to the contents of the affidavit-in- reply filed on behalf of the respondents, wherein there are categorical averments to the effect that the GSEB, GTU, MSEB and MSCE do not qualify as educational institutions; that the services provided by the petitioners to the Boards/University are not services specified in section 66D(l) of the Finance Act, 1994; and that the services provided by the petitioners are not exempt under serial No. 9 of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012 as amended. It was submitted that considering the conclusive nature of the show-cause notices which is further supported by the affidavits-in-reply filed in these cases, it is evident that the respondents have already determined the liability of the petitioners and, therefore, the matters do not remain in the realm of a show-cause notices; the authority has predetermined the issue and hence, there exists a real danger of bias, and therefore, also the writ petitions under article 226 of the Constitution of India are maintainable.

6. In the aforesaid backdrop, reference may be made to section 35L of the Central Excise Act, 1944, which provides for appeal to the Supreme Court and section 35G of the said Act which provides for appeal to the High Court, which are extracted herein below for ready reference:

“35-L. Appeal to Supreme Court.— (1) An appeal shall lie to the Supreme Court from—

(a) any judgment of the High Court delivered—

(i) in an appeal made under section 35-G; or

(ii) on a reference made under Section 35-G by the Appellate Tribunal before the 1st day of July, 2003;

(iii) on reference made under section 35-H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after the passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or

(b) any order passed before the establishment of the National Tax Tribunal by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.

(2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.”

“35G. Appeal to High Court – (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment) if the High Court is satisfied that the case involves a substantial question of law.”

6.1. Thus, against an order passed by the Appellate Tribunal, appeal lies to the High Court; however, the order which is subject matter of challenge should not relate to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment. Since classification of goods or services has a direct relation with the rate of duty, an appeal against an order of the Appellate Tribunal relating to a classification dispute would also lie before the Supreme Court and not the High Court.

6.2. Since an appeal against a matter which relates to the determination of a question having a relation to the rate of duty or value of goods for the purposes of assessment lies to the Supreme Court and not to the High Court, this court ordinarily, would not entertain such a dispute in exercise of powers under article 226 of the Constitution of India.

6.3. The first question that therefore needs to be examined is whether the dispute involved in the present cases is a classification dispute.

6.4. A dispute can be said to be a classification dispute provided it involves a question regarding the entry under which particular goods or services fall. In the present cases, insofar as the nature of the services is concerned, there is no dispute. The question involved in these cases is whether the institutions to which the services are supplied by the petitioners are educational institutes. In the opinion of this court, the question as to whether an institution is an educational institution or not, is strictly speaking, not a classification dispute.

6.5. Moreover, in both these cases there is no dispute on facts. On a perusal of the impugned show-cause notices, it is apparent that based on admitted facts, the only dispute raised is a purely legal issue, namely, whether the institutions to which the services are supplied by the petitioners are educational institutions. Moreover, the relevant material on the basis of which such question can be decided is already on record.

6.6. This court is of the view that the decision of the Supreme Court in Union of India v. Coastal Container Transporters Association, (supra) would not be applicable to the facts of the present cases, inasmuch as, in that case the court had firstly found that the dispute involved in the case was a classification dispute; and secondly, that even from the contents of the show-cause notices, it could not be said that there are no factual disputes; whereas the present cases do not involve any classification dispute, nor do they involve any disputed questions of fact.

6.7. In Deputy Commissioner Central Excise v. Sushil & Co., (supra) on which reliance has been placed on behalf of the petitioners, the Supreme Court held thus:

“……… we find that the High Court has simply gone by the contract in question, which was entered into between the respondent and M/s Birla Corpn. Ltd. and taking into consideration all the averments, which were made in the show-cause notice, on the basis of admitted facts, it has come to a conclusion that even when the allegations in the show-cause notice are accepted, the said contract does not amount to providing any “Cargo Handling Service” as defined under Entry 23 of Section 65 of the Act. Therefore, we are of the opinion that the High Court did not commit any mistake or illegality in entertaining the writ petition when no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties, which were so specifically recorded by the High Court itself.”

6.8. In the facts of the present cases, this court is required to examine a legal issue, viz. as to whether on the allegations made in the show-cause notices, the institutions to which services have been provided by the petitioners are educational institutions; and no disputed questions of fact are involved. In these circumstances, the contention that these petitions under article 226 of the Constitution of India are not maintainable before the High Court does not merit acceptance.

6.9. Reference may also be made at this stage to the contents of the show-cause notice dated 20.04.2018 issued to the petitioners in Special Civil Application No. 20748 of 2018, the relevant part whereof, are extracted hereunder:

6.9.1. In the last sub-paragraph of paragraph 7.5.2 of the show-cause notice, it has been stated thus:

“Truly, it needs to be examined as to whether the Boards/University viz. to (i) Gujarat State Education Board, (ii) Gujarat Technological University, (iii) Maharashtra State Education Board and (iv) Maharashtra State Council fall under the definition of Educational Institution or not.”

6.9.2. In the context of the above, in paragraph 7.5.3 of the show-cause notice, it has been stated thus:

“7.5.3. In order to ascertain the same, some of the important functions performed by these Boards/ University and definitions as mentioned under their acts of Incorporation have been taken into consideration.”

6.9.3. Thereafter reference has been made to powers and duties performed by the Gujarat Secondary and Higher Secondary Education Board under the Gujarat Secondary Education Act, 1972, the objects of the University under the Gujarat Technological University Act, 2007; the powers and duties of the Maharashtra State Council of Examination under the Maharashtra State Council of Examinations Act, 1998; and powers and duties of the Maharashtra Secondary and Higher Secondary Education Boards under the Maharashtra Secondary and Higher Secondary Education Boards Act, 1965.

6.9.4. In paragraphs 7.6.1 and 7.6.2 of the show-cause notice, the following findings have been recorded:

“7.6.1 Further on examining the functions and duties of the above said Boards/University it appears that these Boards/University are functioning as organizations which are entrusted with the work of creating more schools/colleges/institutes under their affiliation, to prepare the syllabus of education for such institutes, to conduct academic tests and exams, to appoint examiners / supervisors for smooth conduct of examination, to declare the results of such examinations etc. On a broader aspect these University/Boards work more like managerial organization to plan the syllabus of education and conduct of examination for the institutes affiliated under them. For this purpose, the Boards/University procure the services of other service providers for such examination related and result processing services.

On careful reading of the definitions of educational institutions as given under the Finance Act, 1994 and comparing it with the functions and duties of the (i) GSEB (ii) GTU (iii) MSEB and (iv) MSCE suggest that their institution do not appear to qualify as educational institutions.

M/s. SMPL is engaged in providing such services to these Boards/University and is receiving consideration against such services from them. However, it appears that with an intention to evade payment of service tax, they have misstated these organizations as “Educational Institutions” to claim incorrect and ineligible exemption on their liability of payment on service tax on the gross consideration received from these Boards/University for the services provided to them.

7.6.2 It also appears that even before insertion of definition of educational institution vide Notification No. 06/2014-ST dated 11.07.2014, the (i) GSEB (ii) GTU (iii) MSEB and (iv) MSCE were not educational institutions as per the definition of educational institutions under the Section 2(b) of the Gujarat Educational Institutions (Management) Act, 1976 as described in para 7.5.3.5 and 7.5.3.6 above.”

6.9.5. In the last sub-paragraph of paragraph 7.7.2, it has been recorded thus:

“It is relevant to note that not all Universities or such like institution have Departments, Faculties and Students on their roll for imparting education. The service receiving institutions in this present case are merely entrusted with the task of affiliation and preparation of guidelines for institutes registered/affiliated under them. These institutes are different from the “University” stated in the case law by the fact that these University/Boards are neither equipped with nor mandated to have on board faculty, Departments and Students under their roll for imparting education directly to their students. Hence, the claim of M/s SMPL to avail exemption relying on the said case law does not seem sustainable.”

6.9.6. In the show-cause notice reference is made to replies received from the aforesaid institutes as regards whether they are educational institutions. After considering the replies, in paragraph 7.14 of the show-cause notice, it has been recorded that none of the Boards/University are involved in providing any services by way of (i) pre-school education up to higher secondary or equivalent, or (ii) education as part of curriculum for obtaining a qualification recognized by any law for the time being in force, or (iii) education as a part of an approved vocational education course. Therefore, they do not appear to be educational institutions as per the definition in Finance Act, 1994. Therefore, the claim of exemption from payment of service tax by M/s Sahitya Mudranalaya Private Limited, Ahmedabad for providing services to such Boards/University considering them as educational institute does not seem sustainable.

6.9.7. In paragraph 8 of the said show-cause notice, after going through the statements and documents submitted by the petitioner, it is recorded that it is a service provider who is engaged in providing of taxable services, viz. result processing and other pre and post examination related services, which appear to be taxable under the statutory provisions mentioned thereunder. Reference is made to section 66B of the Finance Act, 1994 and it is recorded that since the said services do not figure in the negative list provided under section 66D specifically clause (l) and are not exempted services under Notification No. 25/2012 dated 20.06.2012, the said services continue to be taxable under the Finance Act, 1994.

6.10. Thus, categorical conclusive findings have been recorded in the show-cause notice after considering the submissions of the petitioner and the respective Boards/University. Similar conclusive findings have also been recorded in the show cause notice issued to M/s Rajan Travels, the petitioner in Special Civil Application No.7414 of 2019. Under the circumstances, the issuance of the impugned show-cause notices is merely an empty formality, inasmuch as the issues raised therein already stand concluded by virtue of the findings recorded in the showcause notices.

6.11. The Supreme Court, in Seimens Ltd. v. State of Maharashtra (supra), has held that when a notice is issued with premeditation, a writ petition would be maintainable. In such an event, even if the court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose.

6.12. In Oryx Fisheries Private Limited v. Union of India, (supra), the Supreme Court has inter alia held that if on a reasonable reading of a show-cause notice, a person of ordinary prudence gets the feeling that his reply to the show-cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such show-cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable opportunity of defence.

6.13. In the present cases, a perusal of the impugned show-cause notices clearly shows that the authority concerned has given conclusive findings on all the issues on which the show-cause notices have been issued. The principles enunciated in the above decisions would, therefore, be squarely applicable to the facts of the present case. Therefore, on this ground also, the present writ petition under article 226 of the Constitution of India is maintainable.

7. Before adverting to the merits of the rival submissions with respect to the impugned show-cause notices , it may be noted that the learned counsel for the petitioners have contended that the respondents have no authority to issue the impugned show-cause notices as there is no authority under section 73(1) of the Finance Act, 1994 to initiate proceedings because after the repeal of Chapter V of the Finance Act, 1994 by the Central Goods and Services Tax Act, 2017, there is no power to initiate any fresh proceedings under the repealed Act, that is Chapter V of the Finance Act, 1994. Since a question of jurisdiction has been raised, which goes to the root of the matter, it needs to be answered first.

7.1. Mr. Mihir Joshi and Mr. Mitul Shelat, learned counsel for the petitioners, submitted that the respondent – authority has no jurisdiction to initiate fresh proceedings after the omission of Chapter V of the Finance Act (on 20.04.2014); and after deletion of Entries 92 and 92C in the 7th Schedule (List 1 – Union List) (by Constitution (101st Amendment) 2016, dated 16.09.2016). It was submitted that section 174(2)(e) of the CGST Act does not authorise initiation of fresh/de novo investigation, inquiry and is restricted to continuation of such investigation, inquiry, verification, which are pending on the date of the repeal. It was submitted that since no proceedings were initiated under Chapter V during time when it was in force, section 174 of the CGST Act does not authorise initiation of any proceedings under Chapter V of the Finance Act, which has been omitted. It was submitted that the impugned show-cause notice is, therefore, without authority and jurisdiction and hence, the proceedings pursuant to the impugned show-cause notices are required to be dropped.

7.2. On the other hand, Mr. Ankit Shah, learned Senior Standing Counsel for the respondents submitted that the authorities are exercising the powers under Chapter V of the Finance Act, 1994, read with section 174(2)(e) of the CGST Act. It was submitted that the petitioners have referred exclusively to provisions of section 173 of the CGST Act whereby, Chapter V of the Finance Act, 1994 has been omitted without referring to the provisions of section 174 of the CGST Act. In this regard, the attention of the court was invited to the savings clause contained in section 174(2)(e). Reliance was placed upon the decision of the Gauhati High Court in writ petition (C) No. 2059 of 2018 in the case of Laxmi Narayan Sahu v. Union of India and others, wherein, the court has held thus:

“28. In other words, the proposition laid, down in paragraph 37 of Kolhapur Canesugar Works Ltd. (supra) is that the continuance of a further proceeding under an omitted Act depends upon as to whether a savings clause is provided in the enactment by which the earlier enactment was omitted. In the instant case, it is taken note of that the provisions of Chapter V of the Finance Act of 1994 were omitted” by Section 173 of the CGST Act of 2017, where Section 173 is under the heading of Amendment of Act 32 of 1994′. Section 174 of the said Act which is under the heading of ‘Repeal and Saving, in Sub-Section 1 provides that save and otherwise provided in the Act, on and from the date of commencement, the portion of the Central Act of 1994, the Medicinal and, Toilet Preparation (Excise Duties) Act 1955, the Additional Duties of Excuse (Goods of Special Importance) Act 1957, the Additional Duties of Excise (Textiles and Textile Articles) Act and the Central Excise Tariff Act, 1985 stood repeated.

29. But Section 174(2) of the CGST Act of 2017 provides that the repeal of the said Acts and the amendment of the Finance Act of 1994 (Act 32 of 1994) to the extent mentioned in Section 174(1) or 173, as the case may he, shall not, amongst others, effect any investigation, enquiry or verification (including scrutiny and audit), assessment proceedings, adjudication or any other legal proceeding or recovery of arrears etc., and” all such proceedings may be instituted, continued or enforced as if the Act had not been so amended or repealed.

30. The Constitution Bench of the Supreme Court in Kolhapur Canesugar Works Ltd (supra) had also referred and followed the earlier pronouncement of the Constitution Bench in Rayala Corporation (P) Ltd (supra) and, therefore, the proposition laid down in paragraph 37 of Kolhapur Canesugar Works Ltd. (supra) can either be a clarification or it can be argued to be in conflict with the pronouncement in paragraph 17 of Rayala Corporation (P) Ltd (supra). Even if it is taken to be a conflict, but the decision having been rendered by a Bench of equal strength, the proposition that is more appealing is to be taken into consideration. The proposition in paragraph 37 of Kolhapur Canesugar Works Ltd. (supra) providing that the proceedings under an omitted enactment continues to remain in the event of there being a savings clause in the enactment bringing about such omission appears to be more appealing that the proposition in Rayala Corporation (P) Ltd (supra) providing for a discontinuance of such proceeding.

31. As the provisions of Section 174(2) also is clearly applicable in respect of an omission of the enactment under Section 173, therefore, any such investigation, enquiry, etc’, that was instituted, continued or enforced under Chapter V of the Finance Act of 1994, continues to remain in place in spite of such omission of Chapter V of the Finance Act. In other words, Section 174(2)(e) is a savings clause in respect of any investigation, enquiry etc., that was/ to be instituted under Chapter V of the Finance Act of 1994. A conjoint reading of Section 173 and 174(2)(e) would show that while bringing an omission to the provision of Chapter V of the Finance Act of 1994, a savings clause for continuing with the proceedings initiated/ to be initiated was also duly provided. Existence of the savings clause in respect of omission of Chapter V of the Finance Act of 1994 clearly brings it within the purview of the provisions laid down by the Constitution Bench of the Supreme Court in paragraph 37 of Kolhapur Canesugar Works Ltd. (supra).

32. As already elucidated hereinabove, paragraph 37 of Kolhapur Canesugar Works Ltd. (supra) provides that if a statute stood omitted with a savings clause, the savings clause would not render it impermissible for the proceedings initiated/ to be initiated under Chapter V of the Finance Act of 1994, which stood omitted by Section 173 of the CGST Act of 2017 to be continued.

33. A conjoint reading of the provisions laid down in paragraph 37 of Kolhapur Canesugar Works Ltd. (supra) and Section 173 and 174(2)(e) would lead to a conclusion that although Chapter V of the Finance Act of 1994 stood omitted under Section 173, but the savings clause provided under Section 174(2)(e) will enable the continuation of the investigation, enquiry, verification etc., that were made/ to be made under Chapter V of the Finance Act of 1994.

34. In view of such conclusion, we find the writ petition to be devoid of any merit and the relief sought for interfering with the demand-cum-show cause notices of various dates issued by the Assistant Commissioner Central Goods and Service Tax of the different districts would have to stand rejected. Accordingly, the writ petitions stand dismissed.”

7.3. It was submitted that in the terms of the above decision of the Gauhati High Court, although Chapter V of the Finance Act, 1994 stood omitted under section 173 of the CGST Act, but the savings clause provided under section 174(2)(e) of the CGST Act will enable the continuation of the investigation, inquiry, verification etc. that were made/to be made under Chapter V of the Finance Act. It was, accordingly, submitted that the petitioners are not justified in contending that the respondents have no jurisdiction or authority in law to issue the impugned show-cause notice.

7.4. Section 173 of the CGST Act reads as under:

“173. Amendment of Act 32 of 1994.- Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted.”

7.5. Thus, by virtue of section 173 of the CGST Act, Chapter V of the Finance Act, 1994, which makes provision for service tax, came to be omitted.

7.6. Section 174 of the CGST Act reads as under:

174. Repeal and saving.— (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed.

(2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (32 of 1994)(hereafter referred to as “such amendment” or “amended Act”, as the case may be) to the extent mentioned in the sub-section (1) or Section 173 shall not—

(a) revive anything not in force or existing at the time of such amendment or repeal; or

(b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts:

Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or

(d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or

(e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed;

(f) affect any proceedings including that relating to an appeal, review or reference, instituted before on, or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed.

(3) The mention of the particular matters referred to in sub-sections (1) and (2) shall not be held to prejudice or affect the general application of Section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.

7.7. Thus, by virtue of section 173 of the CGST Act, Chapter V of the Finance Act, 1994 stands omitted. Sub-section (2) of section 174 of the CGST Act provides that the amendment of Finance Act, 1994 shall not – “(e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed.

7.8. Thus, clause (e) of sub-section (2) of section 174 of the CGST Act provides for institution of investigation, inquiry, verification, assessment proceedings, adjudication and other legal proceedings as if the Finance Act, 1994 has not been so amended. Therefore, even after the omission of Chapter V of the Finance Act, 1994, by virtue of clause (e) of sub-section (2) of section 174 of the CGST Act, the authority is authorised to institute any legal proceeding under the said Act. The contention that the authority does not have authority to initiate fresh proceedings after the omission of Chapter V of the Finance Act, therefore, does not merit acceptance.

8. Adverting to the merits of the case, Mr. Mihir Joshi, learned counsel for the petitioners in Special Civil Application No. 20748 of 2018 raised two fold contentions. The first contention was that the services provided by the petitioners to the Maharashtra State Council of Examination, Pune, Maharashtra State Board of Secondary and Higher Secondary Education, Gujarat Secondary and Higher Secondary Education Board, Gandhinagar and the Gujarat Technological University, Ahmedabad are exempted from service tax; and the second contention was that the respondent – authorities are not justified in invoking the extended period of limitation.

8.1. Elaborating on first ground, the learned counsel submitted that the petitioners have provided services in the nature of examination related activities like bar code scanning, printing, OMR scanning, data entry etc. to the aforesaid organisations. Serial No. 9 of the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 exempted from service tax services by way of “(a) auxiliary education services to an educational institution”. Notification No. 3 of 2013 dated 01.03.2013 substituted for the words, “provided to or by an educational institution” with the words “provided to an educational institution. Reference was made to Notification No.6 of 2014 dated 11.07.2014 whereby, Entry 9 came to be substituted as under:

“9. Services provided,-

(a) by an educational institution….

(b) to an educational institution by way of:

(i) transportation of students, faculty and staff;

(ii) ….

(iii) ….

(iv) services relating to admission to or conduct of examination by such institution.”

It was pointed out that in the said notification; clause (oa) was introduced defining “educational institution” to mean an institution providing services specified in clause (l) of section 66D of the Finance Act, 1994 .

8.2. Reference was made to clause (l) of section 66D of the Finance Act, 1994 as well as substituted clause (oa), which came to be substituted by Notification No.9 of 2016-ST dated 01.03.2016.

8.3. The attention of the court was invited to various notifications/circulars issued from time to time, reference to which, shall be made at an appropriate stage.

8.4. It was submitted that the sole ground on which exemption is sought to be denied to the petitioners is that the service recipients are not educational institutions. It was submitted that the service recipients are educational institutions as the authority itself has identified the nature of functions and duties being performed by the service recipients and noticed that the service recipients are involved in prescribing syllabus, conducting examination and awarding qualifications. Each of these functions is integrally associated with education and the recipients would, therefore, clearly come within the purview of the term “educational institutions”. In support of such submission, the learned counsel placed reliance upon a decision of the Supreme Court in Gujarat University v. Krishna Ranganath Mudholkar, AIR 1963 SC 703, wherein, the court has held that the expression “education” is of wide import and includes all matters relating to imparting and controlling education. Reliance was also placed upon a decision of the Supreme Court in the case of P. A. Inamdar v. State of Maharashtra, (2005) 6 SCC 537, wherein, the court has held thus:

“81. “Education” according to Chambers Dictionary is “bringing up or training; strengthening of the powers of body or mind; culture”.

82. In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edn., 2005, Vol. 2) “education” is defined in very Wide terms. It is stated:

“Education is the bringing up; the process of developing and training the powers and capabilities of human beings. In its broadest sense the word comprehends not merely the instruction received at school, or college but the whole course of training moral, intellectual and physical; is not limited to the ordinary instruction of the child in the pursuits of literature. It also comprehends a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with ‘learning’.”

83. In Sole Trustee, Lok Shikshana Trust v. CIT, (1976) 1 SCC 254, the term “education” was held to mean:

“the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. What education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.”

84. In “India Vision – 2020” published by the Planning Commission of India, it is stated (at p. 250):

“Education is an important input both for the growth of the society as well as for the individual. Properly planned educational input can contribute to increase in the gross national products, cultural richness, build positive attitude towards technology and increase efficiency and effectiveness of the governance. Education opens new horizons for an individual, provides new aspirations and develops new values. It strengthens competencies and develops commitment. Education generates in an individual a critical outlook on social and political realities and sharpens the ability to selfexamination, self-monitoring and self-criticism.”

8.5. Reference was made to the decision of the Supreme Court in the case of Nidhi Kaim v. State of M.P., (2016) 7 SCC 615, for the proposition that the examination is considered as a common tool around which the entire education system revolves.

8.6. Reference was also made to the decision of the Supreme Court in State of T.N. v. K. Shyam Sunder, (2011) 8 SCC 737, which emphasizes the importance of common curriculum and prescription thereof as an integral and essential requirement of education.

8.7. Reliance was also placed upon a decision of Orissa High Court in Secondary Board of Education, Orissa v. Income Tax Officer, Ward “E”, Cuttack, [1972] 86 ITR 408.

8.8. It was submitted that the Supreme Court as well as different High Courts have considered the nature and functions being discharged by Boards and authorities constituted by the State Government and have held them to be educational institutions and the petitioners are entitled to claim exemption under Serial No.9 of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012.

8.9. Reference was made to an order dated 23.08.2018 passed by the Gujarat Authority for Advance Ruling, Goods and Services Tax, being Advance Ruling No. GUJ/GAAR/R/2018/16, to submit that the authority, while considering the question of exemption in relation to examination related services provided by M/s. Edutest Solutions Private Limited, to the same service recipients, has held that the services provided of printing of questions papers for conduct of examination by such institutions would be covered by Serial No.66 of Notification No. 12/2017, as amended. It was pointed out that the institutions referred to in sub-clause (2) are also described in paragraph 2 of the order and the petitioners are also providing similar services to the same service recipients. It was submitted that principle of law regarding availability of exemption to such services provided to such institutions should, therefore, be followed in the case of the petitioners also.

8.10. As regards the second contention with regard to the invocation of the extended period of limitation, the learned counsel for the petitioners submitted that the respondents themselves believed that the services provided by the petitioners are services provided to educational institutions and therefore, exempt. The respondents had issued a circular dated 19.09.2013 expressly declaring that such services provided to educational institutions are exempt. Such understanding of the respondents is also reflected in the notification dated 26.07.2018. It was submitted that when the respondents had themselves conveyed that the service in question was not taxable service, they are not justified in invoking the extended period of limitation. It was urged that there is no suppression on the part of the petitioners and that insofar as fraud and suppression are concerned, the particulars of such fraud or suppression have to be set out in the show cause notice inasmuch as invocation of the larger period of limitation is a jurisdictional issue, in absence of which it is not permissible for the respondents to invoke the larger period of limitation.

8.11. It was, accordingly, urged that the petitions deserve to be allowed by setting aside the impugned show-cause notice and any proceedings undertaken pursuant thereto.

9. Mr. Mitul Shelat, learned advocate for the petitioners in Special Civil Application No. 7414 of 2019, reiterated the submissions advanced by Mr. Joshi. It was submitted that impugned notice seeks to invoke extended period of limitation in respect of period from 01.10.2013 to 31.03.2016; however, the impugned notice does not disclose any finding of existence of the jurisdictional fact namely that the duty has not been paid by reasons of either fraud or collusion or willful misstatement or suppression of facts or contravention of any provisions of the Act or rules made thereunder with the intent to evade payment of duty. It was submitted that it is well settled that there has to be something positive other than a mere failure to disclose a transaction and pay tax thereon before the assessee is saddled with any liability. It was submitted that it is equally well settled that when the assessee is guided by the action of the authority itself, it is impermissible for the department to invoke the extended period of limitation. It was submitted that in the present case, the authority was well aware and has itself found that the services provided by the petitioners to the service recipients are exempted services. This is pursuant to the adjudication up to the level of Commissioner (Appeals). Even, in the course of audit undertaken for the period for which, notice has been issued, no error has been found in the action of the petitioners in availing exemption. It was contended that, therefore, it is impermissible to invoke the extended period of limitation.

9.1. Next it was submitted that the show-cause notice suffers from non-application of mind on the part of the authority, inasmuch as, it is held that the Gujarat Technological University is a body corporate in terms of section 3(4) of the Gujarat Technological University Act and, consequently, it has been held that the service tax liability in relation to the services provided does not rest upon the petitioner. It was submitted that the Gujarat Secondary and Higher Secondary Education Board is constituted under the Gujarat Secondary and Higher Secondary Act, 1972. The Board is also a body corporate under section 3 of the Gujarat Secondary and Higher Secondary Act, 1972 and has a perpetual succession and common seal. Similarly, the Gujarat Council of Educational Research and Training (GCERT) and Gujarat State Examination Board (GSEB) are both, body corporates, each of them being a society registered under the Societies Registration Act, 1860. It was submitted that, having held that the petitioner is not liable in relation to the service tax for the services provided to service recipients who are body corporate, the respondent could not have held the petitioner liable to pay service tax in relation to the other service recipients who were also body corporates.

9.2. It was pointed out that the authority itself has held that the services provided by the petitioner to the service recipients is an exempted service under the Notification No.25/2012 dated 20.06.2012 and has, accordingly, held that the petitioners are not liable to pay service tax on rent-a-cab services with effect from 01.07.2012. The authority has further directed the refund of the tax paid subject to the fulfillment of requirements under section 11B of the Central Excise Act as made applicable to the service tax. This finding is confirmed by the Commissioner of Central Excise (Appeals). It was pointed out that having held that the service tax in question was exempted and the service tax paid is eligible for refund, the Commissioner (Appeals) did not allow the petitioner to retain the refund as it would amount to unjust enrichment, which decision has been accepted by the Department. The order directing recovery of refund is challenged by the petitioner before the Tribunal. It was contended that having accepted that the services provided by the petitioners to the service recipient is an exempted service under Notification No.25/2012 dated 20.06.2012, the respondent authority has no jurisdiction to issue the subject notice alleging non-payment of service tax in relation to the selfsame services provided to the selfsame recipients during the period of the selfsame notification.

9.3. It was accordingly urged that the petition deserves to be allowed in terms of the reliefs prayed for.

10. Opposing the petitions, Mr. Ankit Shah, learned Senior Standing Counsel for the respondents, invited the attention of the court to the services covered under the negative list of services as contained in section 66 of the Finance Act, 1994, to submit that the services that are provided thereunder that fall within the negative list of services. It was contended that the services provided by the petitioners for various examination related services to the State Education Board, State Technological University and State Council of Examination, do not fall within the scope and ambit of clause (l) of section 66D of the Finance Act, 1994, and hence, such services are taxable with effect from 01.07.2012.

10.1. It was submitted that on careful reading of the clause (l) of section 66D of the Finance Act, 1994, it is evident that only services provided as (i) pre-school education and education up to higher secondary or equivalent; or (ii) education as a part of qualification recognized by any law for the time being in force; or (iii) education as a part of approved vocational course are non-taxable by virtue of the negative list. It was submitted that it is the case of the petitioners that they provided auxiliary services as defined under clause (f) of the definition provided in the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 to the Boards/University. It was submitted that the petitioners would be entitled to exemption in respect of auxiliary educational services provided such services are provided to educational institutions, whereas, the Boards/University to whom services have been provided by the petitioners do not fall within the ambit and scope of “educational institution”. It was submitted that only those entities would be qualified under the term “educational institution” which provide services which have been referred to hereinabove.

10.2. Reference was made to the averments made in the affidavit-in-reply filed on behalf of the respondents, wherein it is stated that as per the functions and duties of the Boards/University referred to therein, it is observed that they are functioning as organisations which are entrusted with the work of creating more schools/colleges/institutes under their affiliation, to prepare the syllabus of education for such institute, to conduct the academic tests and exams, to appoint examiners/ supervisors for smooth conduct of examinations, to declare the results of such examinations etc. It was contended that the Boards/ University work more like a managerial organisation to plan the syllabus of education and conduct of examination for the institutes affiliated under them and it is for this purpose, that the Boards/University procure the services of other service providers for such examination related and result processing services. It was submitted that considering the ambit of section 66D (l) as well as the definition of “educational institution” as defined under clause (oa) of the Mega Exemption Notification, the organisations to which the services have been provided by the petitioners, do not qualify as educational institutions.

10.3. Insofar as invocation of the extended period of limitation is concerned, the attention of the court was invited to the contents of the impugned show-cause notices, to submit that the foundation was duly laid in the impugned show-cause notices wherein, it has been observed that the petitioners have deliberately contravened the provisions of the Finance Act, 1994 and rules made thereunder with an intention to evade the payment of service tax. It was, accordingly, urged that the petitions being devoid of merits, deserve to the dismissed.

11. From the facts and the contentions as noted herein above, it is evident that the main ground on which the petitioners are sought to be denied exemption from service tax in respect of the services provided by them to the Boards/University is that according to the respondents, the Boards/University are not educational institutions.

12. The facts are not in dispute, inasmuch as the nature of services provided by the petitioners in Special Civil Application No.20748 of 2018 are examination related activities like Barcode Scanning, Printing, OMR Scanning, Data Entry, etc. provided to the service recipients mentioned in the impugned show-cause notice and in case of the petitioners in Special Civil Application No. 7414 of 2019, the services provided are in the nature of rent-a-cab in connection with the examinations held by the concerned Boards/University. It is an admitted position that such services are exempted under section 66D(l) of the Finance Act, 1994 as well as under Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 if such services have been provided to the “educational institutions”. The petitioners have not paid service tax on the services provided to the above institutions claiming exemption under serial No. 9 of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012, as amended, applicable to the services provided to educational institutions. The case of the respondents is that the institutions to which the services by way of result processing and conducting of examination related work have been provided by the petitioners, do not provide the services specified in clause (l) of section 66D of the Finance Act, 1994 and are, therefore, not “educational institutions”.

13. The moot question that, therefore, arises for consideration is whether the Boards and University to whom services are provided by the petitioners are “educational institutions”.

13.1. It is the case of the petitioners that in view of the functions and duties of the Boards/University under the relevant statutes, the services provided to them fell under the negative list till 13.05.2016. Furthermore, it is the case of the petitioners that the services provided by them are covered under Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 as amended from time to time.

13.2. Vide section 143(F) of the Finance Act, 2012, with effect from 01.07.2012, the Finance Act, 1994 came to be amended whereby section 66D, which provides for negative list of services came to be inserted. Services which fall under the negative list of services are not chargeable to service tax under section 66B of the Finance Act, 1994 on or after the coming into force of the Finance Act, 2012.

13.3. Clause (l) of section 66D of the Finance Act, 1994, which is relevant for the present purpose, reads thus:

“66-D. Negative list of services.- The negative list shall comprise of the following services, namely-

(l) services by way of –

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; (iii) education as a part of an approved vocational education course.”

13.4. Entry 9 of Mega Exemption Notification No.25/2012-ST dated 20th June, 2012, which was effective from 01.07.2012 to 31.03.2013, reads as under:

“9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(a) Auxiliary educational services; or

(b) Renting of immovable property;

Definition (f) – “auxiliary educational services” means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge – enhanced activity, whether for students or the faculty, or other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution;”

13.5. With effect from 11th July, 2014, the definition of “educational institution” came to be inserted in Mega Exemption Notification No.25/2012 dated 20th June, 2012 vide clause (oa), which was in force from 11.07.2014 to 14.05.2016. Clause (oa) reads as under:

“(oa) Educational institution means an institution providing services specified in clause (l) of section 66D of the Finance Act, 1994.”

13.6. The definition of “educational institution” in Mega Exemption Notification No.25/2012 came to be further amended with effect from 14.05.2016, and reads thus:

“(oa) “educational institution” means an institution providing services by way of:

(i) Pre-school education and education up to higher secondary school or equivalent;

(ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

(iii) Education as a part of an approved vocational education course.”

13.7. Thus, with effect from 14.05.2016, the definition of “educational institution” is brought in line with clause (l) of section 66D of the Finance Act, 1994 and is identically worded.

13.8. At this juncture, reference may be made to CBEC Circular No.172/7/2013-ST dated 19.09.2013, which has been issued for clarification regarding levy of service tax on certain services relating to the education sector. The said circular refers to clause (l) of section 66D of the Finance Act, 1994 as  well as Serial No. 9 of Notification No.25/2012-ST dated 20.06.2012. In paragraph 3 of the said circular, it is provided thus:

“3. By virtue of the entry in the negative list and by virtue of the portion of the exemption notification, it will be clear that all services relating to education are exempt from service tax.”

13.9. While “educational institution” came to be defined for the first time with effect from 11.07.2014, the services mentioned in section 66D (l) of the Finance Act, 1994 continued to be exempted.

13.10. According to the respondents, the services provided by the institutions to which services are provided by the petitioners, are not services which can be said to be services by way of pre-school education and education up to higher secondary or equivalent; education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; or education as a part of an approved vocational education course; and therefore, the activities carried out by the Boards/University do not fall within the ambit of clause (l) of section 66D of the Finance Act, 1994 or clause (oa) of the Mega Exemption Notification.

13.11. It is further the case of the respondents that auxiliary education services, that is, conduct of examination and result processing are exempted only if such services are provided to an educational institution. It, however, is not in dispute that the services provided by the petitioners are in the nature of auxiliary education services as defined under clause (f) of the definitions paragraph of the Mega Exemption Notification.

13.12. Notification No.06/2014 – Service Tax dated 11.07.2014 defines “educational institution” to mean an institution providing services specified in clause (l) of section 66D of the Finance Act, 1994. Therefore only those entities which provide such services would qualify under the term “educational institution”.

13.13. It appears that according to the respondents the term “educational institution” envisages only those institutions which actually enroll students and impart education. In paragraph 7.6 of the show-cause notice, it has been stated that on examining the functions and duties of the above said Boards/University, it appears that these Boards/University are functioning as organisations which are entrusted with the work of creating more schools/colleges/institutes under their affiliation, to prepare the syllabus of education for such institutes, to conduct the academic tests and exams, to appoint examiners/supervisors for smooth conduct of examination, to declare the results of such examinations etc. On a broader aspect, these University/Boards work more like managerial organisations to plan the syllabus of education and conduct of examination for institutes affiliated under them. For this purpose, the Boards/University procure services of other service providers for such examination related and result processing services. According to the respondents, therefore, on reading the definition of ‘educational institution’ as given under the Finance Act, 1994 and comparing it with the functions and duties of the (i) GSEB, (ii) GTU, (iii) MSEB and (iv) MSCE, these institutions do not qualify as “educational institutions”.

13.14. The scope and ambit of the expression “educational institution” as defined under clause (oa) of the Mega Exemption Notification requires to be examined. Furthermore, it is required to be ascertained as to whether the services provided by the petitioners to the Boards/University fall within the ambit of clause (l) of section 66D of the Finance Act. Under clause (oa) of the Mega Exemption Notification, “educational institution” is defined to mean an institution providing services by way of: (i) Pre-school education and education up to higher secondary school or equivalent; (ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force; (iii) Education as a part of an approved vocational education course. Clause (l) of section 66D of the Finance Act, 1994 reads thus:

“(l) services by way of-

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;

(iii) education as a part of an approved vocational education course.”

13.15. Thus, the nature of services referred to in clause (l) of section 66D of the Finance Act, 1994 and clause (oa) of the Mega Exemption Notification are verbatim.

13.16. The question is, whether the narrow meaning sought to be assigned to the word “education” by the respondents is required to be adopted, namely only those institutions which directly impart education to the students; or a broader meaning which includes even those institutions which are connected with the education of those students.

13.17. At this juncture, reference may be made to certain decisions on which reliance has been placed on behalf of the petitioners.

13.17.1. In Gujarat University v. Krishna Ranganath Mudholkar, (supra), the Supreme Court held that the expression “education” is of wide import and includes all matters relating to importing and controlling education.

13.17.2. In P. A. Inamdar v. State of Maharashtra, (supra), the Supreme Court held thus:

“81. “Education” according to Chambers Dictionary is “bringing up or training; strengthening of the powers of body or mind; culture”.

82. In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edn., 2005, Vol. 2) “education” is defined in very Wide terms. It is stated:

“Education is the bringing up; the process of developing and training the powers and capabilities of human beings. In its broadest sense the word comprehends not merely the instruction received at school, or college but the whole course of training moral, intellectual and physical; is not limited to the ordinary instruction of the child in the pursuits of literature. It also comprehends a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with ‘learning’.”

83. In Sole Trustee, Lok Shikshana Trust v. CIT, the term “education” was held to mean:

“the systematic instruction, schooling or training given to the young in preparation for the work of life. It also connotes the whole course of scholastic instruction which a person has received. What education connotes is the process of training and developing the knowledge, skill, mind and character of students by formal schooling.”

84. In “India Vision – 2020” published by the Planning Commission of India, it is stated (at p. 250):

“Education is an important input both for the growth of the society as well as for the individual. Properly planned educational input can contribute to increase in the gross national products, cultural richness, build positive attitude towards technology and increase efficiency and effectiveness of the governance. Education opens new horizons for an individual, provides new aspirations and develops new values. It strengthens competencies and develops commitment. Education generates in an individual a critical outlook on social and political realities and sharpens the ability to self-examination, self-monitoring and self-criticism.”

13.17.3. ln Nidhi Kaim v. State of M.P., (supra) the Supreme Court held that the examination is always considered as one of the major means to assess and evaluate candidate’s skills and knowledge be it a school test, university examination, professional entrance examination or any other examination. Candidate’s fitness for his further assignment, whether in studies or employment is, therefore, judged on the basis of his performance in the examination. It is for this reason, the examination is considered as a common tool around which the entire education system revolves.

13.17.4. In State of T.N. v. K. Shyam Sunder, (supra) the Supreme Court held thus:

“21. There has been a campaign that right to education under Article 21-A of our Constitution be read in conformity with Articles 14 and 15 of the Constitution and there must be no discrimination in quality of education. Thus, a common syllabus and a common curriculum is required. The right of a child should not be restricted only to free and compulsory education, but should be extended to have quality education without any discrimination on the ground of its economic, social and cultural background.”

13.18. Thus, the Supreme Court, in the above decisions, has held that:

– the expression “education” is of wide import and includes all matters relating to imparting and controlling education;

– the examination is always considered as one of the major means to assess and evaluate candidate’s skills and knowledge be it a school test, university examination, professional entrance examination or any other examination.

– Candidate’s fitness for his further assignment whether in studies or employment is, therefore, judged on the basis of his performance in the examination. It is for this reason, the examination is considered as a common tool around which the entire education system revolves.

– For the purpose of bringing the right to education under article 21 of the Constitution in conformity with articles 14 and 15, there must be no discrimination in the quality of education, which requires a common syllabus and a common curriculum.

13.19. The Orissa High Court, in Secondary Board of Education, Orissa v. Income Tax Officer, Ward “E”, Cuttack, (supra), has held thus:

“The Board of Secondary Education is not a University but it is undisputedly an educational institution.

Xxxx The income and expenditure of the Board is controlled and the entire expenditure is to be directed towards development and expansion of educational purposes. Even if there is some surplus it is not appropriated by others but it remains part of the sinking fund to be devoted to the cause of education as and when necessary. This being the objective and there being various ways of control of income and expenditure, the Board of Secondary Education cannot be said to be existing for purposes of profits. It exists solely for purposes of education.”

13.20. This court respectfully concurs with the above view of the Orissa High Court, namely that the Board of Secondary Education exists solely for the purposes of education.

13.21. In the light of the above principles enunciated in the decisions referred to hereinabove, this court is of the opinion that the word “education” cannot be given a narrow meaning by restricting it to the actual imparting of education to the students but has to be given a wider meaning which would take within its sweep, all matters relating to imparting and controlling education. Examination is an essential component of education as it is one of the major means to assess and evaluate the candidate’s skills and knowledge, be it a school test, university examination, professional entrance examination or any other examination. As held by the Supreme Court, the examination is considered as a common tool around which the entire education system revolves.

13.22. Thus, education would mean the entire process of learning, including examination and grant certificate or degree or diploma, as the case may be and would not be limited to the actual imparting of education in schools, colleges or institutions only. Unless the School Boards hold examinations, the education of school students would not be complete, so is the case with college students, whose education would be complete only when the University conducts examinations and awards degrees or diplomas. It is the School Boards which issue the Secondary and Higher Secondary School Certificates after holding examinations and the University which confers degrees/diplomas etc. after holding examinations. Unless a student holds a certificate issued by a Board, his or her school education would not be complete, similarly, without a degree or diploma being conferred by the University, college education would not be complete. Therefore, examinations are an indispensable component of education, without which such education is incomplete. Therefore, to say that Boards/Universities are not “educational institutions” would amount to divorcing examinations from education.

13.23. Clause (l) of section 66D of the Finance Act may be examined in the light of the above. Sub-clause (i) of clause (l) refers to pre-school education and education up to higher secondary school or equivalent. When the sub-clause says education up to higher secondary school or equivalent, it goes without saying that it includes the examination leading to conferment of a certificate of having passed the higher secondary school or equivalent. Similarly when sub-clause (ii) says education as a part of the curriculum for obtaining a qualification recognized by any law for the time being in force, it is apparent that the legislature meant the entire process of preparation of curriculum to the holding of examination leading to obtaining of a qualification recognized by any law for the time being in force. If the contribution of the Boards/Universities is excluded, there would be no curriculum for obtaining a qualification nor would there be examination leading to conferment of such qualification. Clearly, therefore, it was not the intention of the legislature to exclude preparation of curriculum and holding of examinations from the ambit of clause (l) of section 66D of the Finance Act, 1994. As a necessary corollary, therefore, the School Boards and the University in question would clearly fall within the ambit of the expression “educational institution” as contemplated under clause (oa) of entry No.2 of Notification No. 25/2012-ST and services provided by such Boards/University would also fall within the ambit of the services as postulated under clause (l) of section 66D of the Finance Act.

13.24. The Government of India has also adopted a similar approach in its Notification No.14/2018 – Central Tax (Rate) dated 26th July, 2018 issued in exercise of powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017, wherein it has been clarified that the Central and State Educational Boards shall be treated as educational institutions for the limited purpose of providing services by way of conduct of examination to the students.

14. Once the Boards/University to whom services have been provided by the petitioners, are held to be educational institutions, the very substratum of the impugned show-cause notices is lost inasmuch as the show-cause notices are premised on the allegation that the service recipients namely the Boards/University referred to hereinabove are not educational institutions and, therefore, the services rendered by them do not fall within the negative list of services as provided under section 66D(l) of the Finance Act, 1994 and that the Board/University are not “educational institutions” as defined under clause (oa) of Entry No.2 of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012.

15. Once it is held that the service recipients are educational institutions, the impugned show-cause notices are rendered unsustainable. Therefore, the question as to whether the respondents were justified in invoking the extended period of time on the ground that the petitioners had, with an intention to evade payment of service tax, misstated that these organisations are educational institutions to claim incorrect and ineligible exemption, is rendered more or less academic. Nonetheless the court deems it fit to answer this question also.

16. Insofar as the validity of extension of the extended period of limitation is concerned, it may be noted that in case of M/s. Rajan Travels, namely the petitioner in Special Civil Application No. 7414 of 2019, the petitioner had first paid the service tax and thereafter claimed refund on the ground that the services provided by it were exempt from service tax. By an order-in-original dated 01.10.2014, it was held that in view of the Notification No. 25/2012-ST dated 20.06.2012 as amended, the services in question were exempted and that the petitioner was eligible to refund of the service tax paid by it. The order-in- original dated 01.10.2014 was scrutinized by the audit section. Thereafter, revenue preferred an appeal before the Commissioner (Appeals) under section 85 of the Finance Act, 1994. Based upon the observations made by the Audit Section, in the memorandum of appeal it was submitted that the tender/work order/contract of hiring vehicles as agreed upon with the service provider to the service receivers is inclusive of all taxes including the service tax portion. However, while sanctioning the refund to the said service provider, the JAC in his argument has not considered these aspects. And since the contract terms refer to the term inclusive of all taxes, it is clear that the service tax was collected from the receivers. It is further stated in the memorandum of appeal that “Since the service provider was not required to pay Service Tax and the Government has no intention to hold on the amount, not due to it, the refund was admissible to the service provider, however, since the service tax portion was already recovered by the party from their service receivers, the refund ought to be credited to the Consumer Welfare Fund in view of the doctrine of unjust enrichment.” Thus, according to the respondents the service provider, namely the petitioner, was not liable to pay service tax and the appeal against the order of refund was limited to the extent that the refund of the service tax to the petitioner would amount to unjust enrichment. The Commissioner (Appeals), by an order dated 29.09.2015, held that though the service tax paid is eligible for refund, the same cannot be allowed to be kept with the petitioner in terms of the provisions contained in section 12C of the Central Excise Act, 1944 as it would amount to unjust enrichment to the petitioner and accordingly, directed the amount to be credited to the Consumer Welfare Fund. Thus, even in appeal, the respondents admitted the fact that the services provided by the petitioner were exempted from payment of service tax. The order passed by the Commissioner (Appeals) has been challenged by the said petitioner before the Customs, Excise and Service Tax Appellate Tribunal. Thus, the respondents at that time had accepted that the services provided by the said petitioner are exempted from payment of service tax under Notification No.25/2012-ST dated 20.06.2012.

16.1. In this backdrop, when the Department itself was of the view that the services provided by the petitioner in Special Civil Application No.7414 of 2019 to the Boards/Universities were covered by the Mega Exemption Notification and were therefore, exempt, the petitioners in both these petitions were equally entitled to hold such a view. Therefore, it cannot be said that the petitioners had, with an intention to evade payment of service tax, misstated that the organisations to which they had provided services are “educational institutions” to claim incorrect and ineligible exemption. The larger period of limitation, therefore, could not have been invoked in the facts and circumstances of the present cases.

17. In the light of the above discussion, the impugned show-cause notices cannot be sustained. The petitions, therefore, succeed and are accordingly, allowed. The impugned show-cause notices are hereby quashed and set aside. Rule is made absolute accordingly in both the petitions, with no order as to costs.

[ Harsha Devani, J. ]
[ Sangeeta K. Vishen, J. ]

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Original judgment copy is available here.